U.S. cash crudes rise despite narrower arbitrage

September 24, 2012|Reuters

NEW YORK, Sept 24 (Reuters) - U.S. cash crude differentialsrose on Monday, the second day of the three-day October contractroll, despite a more narrow transatlantic arbitrage that movedin on weak economic data from Germany, Europe's largest economy,traders said. The three-day roll period after the expiry of the mostrecent contract allows refiners and traders to complete buyingfor October. Brent's premium to U.S. West Texas Intermediate settled at $17.88 a barrel in favor of Brent, in 65 cents fromFriday's settle of $18.53 a barrel. Over the past few years, the wider the arbitrage, the moresupportive for waterborne crudes differentials, which are pricedin line with other global waterborne crudes. Differentialsgenerally fall when the spread moves in, but some traders seethis dynamic as changing as U.S. production increases andreplaces imported barrels. Louisiana Light Sweet traded as high as $21.00, up $1from Friday high. Mars Sour gained 80 cents a barrel, trading at $12.45a barrel. On Monday, the sweet/sour spread widened to $8.52 a barrelfrom last week's average of $7.80 a barrel in favor of LLS. Brent November crude fell $1.61 to settle at $109.81a barrel. November crude fell 96 cents to settle at $91.93 abarrel.